Following the presentation of the 2024 budget by his excellency Dr. Alex Otti on the 12 of December 2023, the summary of the budget might have got lot of Abian’s excited and some other worried, in fact the governors allocation to several sector of the state affairs from the budget show the governor technicality if analysed properly. The budget summarizes that 84% of a total budget of 567,200,000,000.00 to the capital budget and the remaining 17% to the recurrent expenditure for the state in 2024 accounting for 90,752,000,000Of the total budgets for 2024. However, the government naysayers are up with it again, accusing the governor of focusing more on infrastructure rather than focusing on more of the workers aspect of the total budget.
Let’s call to attention the following facts before quoting wrong assumptions towards the recently developed 2024 budget.
The 2024 budget comprises with the following details
- ₦401,200,000,000.00 deficit from the presented budget
- Part of the 2024 deficit will be financed by new borrowings estimated at ₦385, 271,027, 214.
- Fifty per cent of this borrowing will be sourced externally, while the other fifty percent will be procured domestically (quoted by the governor)
- The projected state revenue for the year 2024 amounts to N166 billion, sourced from a variety of avenues including grants from multilateral organizations, internally generated revenue (IGR), federal government allocation and other miscellaneous income streams.
- The just concluded 2023 budget of ₦160,517,504,300.00 accounts for 47.2% recurrent expenditure (₦75,778,628,100.00) and 52.8 % capital expenditure (₦84,738,876,200.00)
Before giving a proper analysis of the details stated above, Abia state for the past 15 years has been disorganized administratively, economically, poor revenue generation systems and health care medics. A proper structure of the budget allocation is as shown
Table 1: Summary of the Abia State 2024 budget allocation
| Sector | Allocations (₦Billion) |
| Education | 113.45 |
| Recurrent expenditure | 90.76 |
| Youth and sport | 17.98 |
| Health care | 85.31 |
| Finance | 29.67 |
| Agriculture | 29.04 |
| Land and housing | 56.16 |
| Works | 96.26 |
Based on Table 1, a cursory analysis suggests that the government aims to promote or even eliminate poor infrastructure, education, healthcare and economic crises in the state. However, it would be inaccurate to compare Abia’s current infrastructural and economic position with neighbouring states such as Port Harcourt and Ebony State based on recent studies. During past administrations, Abia only realized 40% of its proposed economic and infrastructural development plans. The quality of education has also been subpar for several decades prompting the government to prioritize improving educational standards within the state.
What are the ways in which the state can generate revenue to compensate the budget deficit?
Returning to the issue of the proposed N401 billion deficit budget, one may wonder how this amount will be generated given the current challenging situation in Abia following previous administrations. To answer honestly, aside from borrowing funds, an analysis shows that improving any state’s infrastructure is key to attracting investors and boosting other economic activities. The technical approach adopted by Governor’s administration allocates more resources towards sectors that can generate profits for the state thereby enabling sufficient funds generation to cover up for this deficit budget.
Is taking loans a tool for development?
Indeed, the answer is affirmative. As per a research conducted by Adli Kandah [2], the correlation between loans and economic growth cannot be overstated. This is because, given Abia state’s current condition, it is indisputable that there has been no meaningful progress in terms of work done despite budgets being allocated; instead, the state continues to suffer from accumulated underdevelopment every year with funds being siphoned off. Therefore, the only way to bridge this gap in development within the state is through obtaining loans. Dr. Otti himself understands this well as an economist and shrewd banker – he knows that taking out loans serves as a means for economic restitution and progression rather than simply borrowing money for its own sake.
Has the government focused more on infrastructure rather that its recurrent budget?
Arguments also have it that the governor has focused more on infrastructure development and neglect the recurrent expenditure budget, wait!!!, has the past administration forgotten that their total budget for recurrent expenditure was about 45% and yet the state remained in a state of depts, unpaid salaries and pensions and had no solution to the problem. From the mathematical aspect of this, the total recurrent budget for 2023 has over 75 billion naira as recurrent expenditure, comparing with the current recurrent expenditure of 2024 of 90 billion naira. The governor also spoke of payment of owed salaries as promised during resumption of his administration, in addition to that, the governor has promised to increase the salary of civil workers following his statement during a press release on 11th of December 2023.
Why is there a 2024 budget about 358.9 % of the 2023 budget?
From the chart below, we analyzed that following the sharp rise in the exchange rate of dollar from the beginning of 2023 its end, an estimated percentage increase of 186.7 % can be accounted for. Additionally, the south east part of Nigeria has generally witnessed an adamant increase in cost of living, where the price on most commodity has doubled coupled with the fact that the state itself are of poor producing ability. To back this Abia state ranks in top 10 states in Nigeria with over 100% food inflation in the country. When it comes to productivity, Abia state has a record drop of -2.1 % in GDP as recorded in 2022 as expense of a large productive market situated in Aba.
The diagram below also presents a comparison of the annual budget and its effective allocation from 2022 to 2024, with an assumption for the latter year. It is evident that due to fluctuations in GDPs, exchange rates and inflation rates across different state administrations between 2022 and 2023, insufficient funds were allocated towards enhancing economic and infrastructural welfare in the region. The underlying notion is that previous governmental strategies have not yielded satisfactory outcomes thus far; however, the recently released budget for 2024 underscores a concerted effort towards promoting economic growth within the state through capital expenditure accounting for a substantial proportion (84%) of total allocations. A further look at the charts reveals a general increase in the bench mark price for a barrel of oil, inflation rate and the dollar exchange rate, hence only an adequately prepared budget will fit for the transient rise in the set parameters for the 2024 budget.
The following conclusions should keep the administration doubters a bay,
- The current focus on infrastructure aims at elevating the economic condition of the state as a pathway of generating revenue.
- The attempt to loan by the Abia state government moves in the direction of balancing the 2024 budget aimed at revenue generation for the state
- The current government under the leadership of Dr. Alex Otti decided to use a working plan of allocation 84% of the total budget for optimal state development
OPINION: Analysis And Developmental Verdict On The Abia State 2024 Budget is first published on The Whistler Newspaper